Presently, the national soap opera, which is to say, the debate over the debt ceiling, is providing much amusement. In order to hike the debt ceiling, the Republicans are holding out for meager "cuts" and--where have we heard this before?--no new taxes. The Democrats would like the debt ceiling to be raised more; they would also like even less significant reductions in future spending, coupled with increases in taxes, but only on the infernal rich--except, apparently, for the bankers who have been given billions of dollars in bailouts. This is to over-simplify the narrative somewhat; there appear to be at least a handful of Republicans who are seemingly serious about making actual reductions to the deficit, which hampers speaker Boehner's hope for a united front.
Missing entirely from the dog and pony show is any genuine concern for the fate of the American people. The Democrats would like to avoid having to raise the debt ceiling again before Obama attempts to win reelection. The Republicans would prefer that the American people are reminded often of Washingtonian profligacy so that blame is pinned on the president and his party. These stances make a certain amount of political sense, but they are indefensible from any other perspective.
If we consider the situation without pondering any political implications, a few things become clear. First, the United States is deeply indebted. Our ratio of debt to GDP is roughly one. It's good to be suspicious of GDP insofar as it takes into consideration government spending--government programs devoted to digging holes and refilling them would boost GDP--but the ratio between debt and GDP is a reasonable indicator of a nation's solvency. There is no magical ratio, up to which debt is tolerable, or beyond which debt is assured, but given ours at present, it is exceedingly likely that we will never be able to pay back our debt.
While it is certainly possible that I am wrong in thinking thus, it would be exceedingly imprudent to assume that U.S. solvency is assured. If default is not inevitable, it nonetheless must be considered a real possibility. Our debt problem is not new. It came into being with the creation of the Federal Reserve, the subsequent abandonment of the gold standard, and the slew of social programs which were enacted from FDR onward. The actions taken by the last several Congresses--such as the wars in Afghanistan and Iraq, legislation related to Medicare, TARP, stimuli, and so forth--have exacerbated the problem. This current Congress, then, can continue in the ignoble tradition of that venerable institution, or it can take actions which lessen the debt burden. This step would not be unprecedented, but it would be the first such action pursued in many decades.
What would such a step entail? We are told that a failure to raise the debt ceiling will ensure that the U.S. defaults. This is not true. Tax receipts are sufficient to cover interest payments on the debt with money leftover. Should the Congress fail to authorize an increase in the debt ceiling, only foolish and pernicious action by the President would lead to default.
Contrary to the nonsense emanating from Washington then, an increase in the debt ceiling makes default more likely. It is not in the interest of the American people to be burdened with more debt. Instead, the United States Congress must pass a budget which ensures that they are not dependent on debt to make ends meet. The Federal Government is projected to take in 2.1 trillion dollars in fiscal year 2011. This should be sufficient to cover our expenditures. To ensure that this is so, Congress need only do its job: make the cuts necessary to restore solvency. Instead, both parties are taking purely political positions which will do nothing to alleviate the debt crisis.
It is true that making these cuts will be difficult. Present revenues are insufficient to cover Social Security, Medicare and Defense. Hence, even if we scrap every other Federal program, we will need to trim one of the big three to eliminate the deficit. Yet, far from getting better, the problem will become more acute each and every year. Boomers will retire--senselessly I might add, given the nation's impending bankruptcy--putting more stress on Social Security and Medicare. Nor is Defense likely to be willing to take a haircut. Judging from right-wing talk radio, cuts to defense are as intolerable as tax hikes; the Democrats, meanwhile, under our Nobel Peace Prize winning president, have wars going with six countries--Afghanistan, Iraq, Pakistan, Libya, Yemen and Somalia. So the cuts will be difficult to make. Yet this, precisely the task to which our representative are supposed to be devoted, is furthest from Washington's mind.
I cannot say that I see a way out of this mess. We will certainly not grow out of it. Even supposing generous--read: dubious--rates of growth, our entitlement programs and our Empire are too expensive for an aging populace, dependent on Mexican migrants to replace aging boomers. The recession has technically ended, but it continues a world impervious to Keynesian economists.
In all probability, Washington will continue to try to avoid making any hard decisions; we will take on ever more debt, and the parties will try to blame the respective other; the Federal Reserve will purchase any treasuries the Chinese prove unwilling to take; the government will still be able to pay its bills; the people are compelled to make ends meet with depreciated dollars. So it works out for everyone, unless one happens to be a member of the American populace.
It is not the decline and fall that saddens me; as we well know, all good things come to end. No, the tragedy of the American experiment is that we have given no resistance to this great evil. Indeed, we have given it our sanction by continuing to vote for and elect people who care not a whit for us. If this indifference is not painfully obvious now, I cannot say when reality will impinge upon our splendid little fantasies. This grand experiment cannot continue if we are to be governed by those who concern themselves only with the attainment and retention of power. When one puts aside the minute political difference, this, more than anything, unites the two parties. The people are without a voice in Washington.
Wednesday, July 27, 2011
Sunday, July 17, 2011
When lies end
"It will accumulate: moreover, it will reach a head; for the first of all Gospels is this, that a Lie cannot endure for ever." - Thomas Carlyle, The French Revolution
"As indicated in today’s policy statement, the economic recovery appears to be proceeding at a moderate pace, though somewhat more slowly than the Committee had expected, and some recent labor market indicators have also been weaker than expected." - Ben Bernanke, 7/22/11 Press Conference
If one simply points out that there has been no recovery, one is liable to be taken for a biased observer. Those who believe that things are bad--as indeed they are--fail to note--or so we are told--how much worse things would have been had the Federal Reserve and the U.S. Government not acted as they did. This is intended as a serious rebuttal. Yet the very impetus for doubling the monetary base, coupled with the largest stimulus program in the history of civilization, was the fear that without such drastic measures the world as we know it would have descended into violence and chaos. It follows then, that so long as the world stands, the stimulus worked. Only when the apocalypse is upon us will we be able to second guess the wisdom of recent monetary and fiscal policy.
This is convenient for the architects and advocates for said policies, but it's hardly a persuasive argument, especially since there is no proof that the collapse of the housing market would have resulted in Armageddon. Iceland did not pursue the same policies as the Americans, but--as yet--its citizens have not resorted to cannibalism or virgin sacrifice. Whether or not economic stimulus is helpful, then, we know that civilization may continue without it. We will never know how America would have fared had our politicians not proceeded to give billions to bankers and spend borrowed money on dubious political products. All we can say is that we did those things and that the economy is still doing very poorly. We cannot empirically verify that the policies of our government caused the economy to worsen--though we could demonstrate theoretically why it may have done so--but we can emphatically insist that the recovery has not been delivered as promised.
Ben Bernanke is an academic. Recently, he has learned that the neat theoretical world of Keynesian macroeconomics is quite different from the messy world in which he finds himself head of the central bank of the United States. Yet being an academic, it is unlikely that he will alter his beliefs in the theories on which he has expounded for many years. He knows that what he did was right and that the economy should be recovering. He also knows that the economy is not performing as expected. This disparity between reality and his theoretical models can be explained by temporary factors, such as "the aftermath of the tragic earthquake and tsunami in Japan." In fact, it has to be explained in this manner, for his theories cannot be wrong.
Bernanke also points out that: "consumers’ purchasing power has been damped by higher food and energy prices." He offers no word on what may have caused the prices of food and energy to rise, which is to say, he's not about to finger the Federal Reserve as the sole vehicle of inflation. His charts show that inflation is under control, so increases in food and energy prices must be... temporary.
Bernanke's problem is that temporary is becoming more permanent. The sycophantic media believes that he saved the global economy, so they will continue to give him the benefit of the doubt. But we are still something of a Republic, so the people believe their opinion about these sort of things matters. Most Americans have not heard of Bernanke; fewer still have heard of John Maynard Keynes, the defunct economist to whom the Federal Reserve Chairman is a slave. Yet they know when prices go up. They know when jobs go away--and when they don't come back.
Since both parties are enthrall to the corporations and banks at whose behest the stimulus was passed in the first place, prospects for a drastic alteration of fiscal and monetary policy are not good. Some of the tea party candidates show indications of an independent streak, but with the Republicans set to capitulate and raise the debt ceiling in short order, it's save to say that the moneyed interests who caused the housing bubble and also benefited from its bursting, still very much rule the United States.
Which brings us, at long last, back to Carlyle. There are very real limits to how long a lie can be told. In a sit-com, the truth is propounded by the end of the half-hour episode. In the real world, a lie can masquerade as truth for much longer, yet it will eventually break under the weight of its own contradictions.
The Government cannot forever print money for billionaire bankers, thereby impoverishing the rest of Americans, all while insisting that we are on the road to a recovery. I do not say this because I think Americans as a people are extremely intelligent and thus difficult to dupe. On the contrary, in our present state of torpidity, the flicking of television sets has caused us to be duped for a considerable period of time. Yet, as Louis XVI discovered, it is an unwise policy to expect that which is dormant to remain thus forever. Poke him enough, and even the laziest of dogs will awake and attack. And, although he often gives cause to make us forget, man is nobler than any beast.
One cannot mention Carlyle and the Revolution in France without clarifying one's position regarding the prospects of another. At present, the American people, or those that pay attention to these sorts of things, are distracted by the political circus in Washington. The conservatives labor under the illusion that ousting Obama will somehow right the ship of state while the left, with equal lack of sense, believes that handing over the Executive to a Republican would render significant harm to the nation. Comparatively few realize that electoral politics are a mere diversion at this late stage of the Republic. Once the people realize that they are powerlessness to affect reform through official channels, we move one step closer to revolution.
So, for awhile at least, we will remain as we are. But the lies are mounting, moving us closer and closer to a precipice. In a subsequent post, I'll try to flesh out this idea more fully, but for the moment it pays to watch the narrative as constructed by the media to defend government policies and the reality, insofar as we can grasp it, as documented by various marginalized media outlets. The tension between the narrative and reality will become more strained as the former is exaggerated to compensate for the inability of stubborn reality to conform. The days of these particular lies are numbered.
"As indicated in today’s policy statement, the economic recovery appears to be proceeding at a moderate pace, though somewhat more slowly than the Committee had expected, and some recent labor market indicators have also been weaker than expected." - Ben Bernanke, 7/22/11 Press Conference
If one simply points out that there has been no recovery, one is liable to be taken for a biased observer. Those who believe that things are bad--as indeed they are--fail to note--or so we are told--how much worse things would have been had the Federal Reserve and the U.S. Government not acted as they did. This is intended as a serious rebuttal. Yet the very impetus for doubling the monetary base, coupled with the largest stimulus program in the history of civilization, was the fear that without such drastic measures the world as we know it would have descended into violence and chaos. It follows then, that so long as the world stands, the stimulus worked. Only when the apocalypse is upon us will we be able to second guess the wisdom of recent monetary and fiscal policy.
This is convenient for the architects and advocates for said policies, but it's hardly a persuasive argument, especially since there is no proof that the collapse of the housing market would have resulted in Armageddon. Iceland did not pursue the same policies as the Americans, but--as yet--its citizens have not resorted to cannibalism or virgin sacrifice. Whether or not economic stimulus is helpful, then, we know that civilization may continue without it. We will never know how America would have fared had our politicians not proceeded to give billions to bankers and spend borrowed money on dubious political products. All we can say is that we did those things and that the economy is still doing very poorly. We cannot empirically verify that the policies of our government caused the economy to worsen--though we could demonstrate theoretically why it may have done so--but we can emphatically insist that the recovery has not been delivered as promised.
Ben Bernanke is an academic. Recently, he has learned that the neat theoretical world of Keynesian macroeconomics is quite different from the messy world in which he finds himself head of the central bank of the United States. Yet being an academic, it is unlikely that he will alter his beliefs in the theories on which he has expounded for many years. He knows that what he did was right and that the economy should be recovering. He also knows that the economy is not performing as expected. This disparity between reality and his theoretical models can be explained by temporary factors, such as "the aftermath of the tragic earthquake and tsunami in Japan." In fact, it has to be explained in this manner, for his theories cannot be wrong.
Bernanke also points out that: "consumers’ purchasing power has been damped by higher food and energy prices." He offers no word on what may have caused the prices of food and energy to rise, which is to say, he's not about to finger the Federal Reserve as the sole vehicle of inflation. His charts show that inflation is under control, so increases in food and energy prices must be... temporary.
Bernanke's problem is that temporary is becoming more permanent. The sycophantic media believes that he saved the global economy, so they will continue to give him the benefit of the doubt. But we are still something of a Republic, so the people believe their opinion about these sort of things matters. Most Americans have not heard of Bernanke; fewer still have heard of John Maynard Keynes, the defunct economist to whom the Federal Reserve Chairman is a slave. Yet they know when prices go up. They know when jobs go away--and when they don't come back.
Since both parties are enthrall to the corporations and banks at whose behest the stimulus was passed in the first place, prospects for a drastic alteration of fiscal and monetary policy are not good. Some of the tea party candidates show indications of an independent streak, but with the Republicans set to capitulate and raise the debt ceiling in short order, it's save to say that the moneyed interests who caused the housing bubble and also benefited from its bursting, still very much rule the United States.
Which brings us, at long last, back to Carlyle. There are very real limits to how long a lie can be told. In a sit-com, the truth is propounded by the end of the half-hour episode. In the real world, a lie can masquerade as truth for much longer, yet it will eventually break under the weight of its own contradictions.
The Government cannot forever print money for billionaire bankers, thereby impoverishing the rest of Americans, all while insisting that we are on the road to a recovery. I do not say this because I think Americans as a people are extremely intelligent and thus difficult to dupe. On the contrary, in our present state of torpidity, the flicking of television sets has caused us to be duped for a considerable period of time. Yet, as Louis XVI discovered, it is an unwise policy to expect that which is dormant to remain thus forever. Poke him enough, and even the laziest of dogs will awake and attack. And, although he often gives cause to make us forget, man is nobler than any beast.
One cannot mention Carlyle and the Revolution in France without clarifying one's position regarding the prospects of another. At present, the American people, or those that pay attention to these sorts of things, are distracted by the political circus in Washington. The conservatives labor under the illusion that ousting Obama will somehow right the ship of state while the left, with equal lack of sense, believes that handing over the Executive to a Republican would render significant harm to the nation. Comparatively few realize that electoral politics are a mere diversion at this late stage of the Republic. Once the people realize that they are powerlessness to affect reform through official channels, we move one step closer to revolution.
So, for awhile at least, we will remain as we are. But the lies are mounting, moving us closer and closer to a precipice. In a subsequent post, I'll try to flesh out this idea more fully, but for the moment it pays to watch the narrative as constructed by the media to defend government policies and the reality, insofar as we can grasp it, as documented by various marginalized media outlets. The tension between the narrative and reality will become more strained as the former is exaggerated to compensate for the inability of stubborn reality to conform. The days of these particular lies are numbered.
Saturday, July 16, 2011
Newt so good with money
The loathsome Newt Gingrich has some bad news. His campaign is evidently over one million in debt. Were this an Onion article, we would get a quote from one of his campaign staff noting that this is good preparation for becoming president of a nation which is many trillions in debt. Alas, this is not satire, this is merely an establishment Republican candidate who is so inept that Fred Thompson is embarrassed.
With the notable exception of Ron Paul, none of the Republican presidential candidates have shown that they understand two very important things. First, the country cannot return to solvency by closing loopholes in the tax code and defunding Obamacare. Social Security and Medicare are both bankrupt; in the short term they can be financed through the general fund--so long as everything else is cut--but in the longer term, even this is unsustainable. Second, in addition to being extremely costly, the Empire foments hatred of the U.S., which is to say that endless wars are counter to the ends at which our country is aiming. Any candidate who professes to tackle out debt problem while leaving military cuts off the table cannot be taken seriously.
One last note. Since Ron Paul is no longer running for Congress, he could run as a third party candidate. I do not expect him to do this, as the primary intention of his campaign is to spread the message of liberty, but it is interesting nonetheless. When the idiot Republicans nominate someone else, Dr. Paul will be able to return to his home to be with his family in retirement--one that is well deserved for the only public servant for whom the appellation is not disappropos.
With the notable exception of Ron Paul, none of the Republican presidential candidates have shown that they understand two very important things. First, the country cannot return to solvency by closing loopholes in the tax code and defunding Obamacare. Social Security and Medicare are both bankrupt; in the short term they can be financed through the general fund--so long as everything else is cut--but in the longer term, even this is unsustainable. Second, in addition to being extremely costly, the Empire foments hatred of the U.S., which is to say that endless wars are counter to the ends at which our country is aiming. Any candidate who professes to tackle out debt problem while leaving military cuts off the table cannot be taken seriously.
One last note. Since Ron Paul is no longer running for Congress, he could run as a third party candidate. I do not expect him to do this, as the primary intention of his campaign is to spread the message of liberty, but it is interesting nonetheless. When the idiot Republicans nominate someone else, Dr. Paul will be able to return to his home to be with his family in retirement--one that is well deserved for the only public servant for whom the appellation is not disappropos.
Wednesday, July 13, 2011
Unsound Roman money
The difficult task of explaining with exactness the utter demoralization of the currency at the moment when Diocletian ascended the throne cannot be here attempted. Only a few outstanding features can be delineated. The political importance of sound currency has never been more conspicuously, shown than in the century which followed on the death of Commodus (180 AD)...
Although the imperial coins underwent a certain amount of depreciation between the time of Augustus and that of the Severi, it was not such as to throw out of gear the taxation and the commerce of the Empire. But with Caracalla a rapid decline set in, and by the time of Aurelian the disorganization had gone so far that practically gold and silver were demonetized, and copper became the standard medium of exchange. The principal coin that professed to be silver had come to contain no more than five per cent of that metal, and this proportion sank afterwards to two per cent. What a government gains by making its payments in corrupted coin is always far more than lost in the revenue which it receives. The debasement of the coinage means a lightening of taxation, and it is never possible to enhance the nominal amount receivable by the exchequer so as to keep pace with the depreciation. - The Cambridge Medieval History Series, Volume I, pp. 39-40
Plus ca change... The series has been rewritten and reissued periodically, but my highly used copy is about one hundred years old, which is to say that it was written before the ascendancy of Keynesianism. Hence the historian recognizes, very clearly, that debasement does not work. This holds true whether the coins are being reforged with higher percentages of cheaper metal, or if the central bank issues more fiat currency: inflation is ruinous to economies.
No doubt Krugman would have had Diocletian debase his currency even more in order to stimulate the Roman economy and avoid a liquidity trap.
The lesson repeats through history. At some point, the government incurs various expenditures which cannot be funded through taxation, so it debases the currency to makes ends meet. Rather than impose austerity measures upon itself, it debases the currency further; if it persists, the currency becomes effectively worthless. Hence Diocletian began to accept taxes in the form of agricultural products, thereby unintentionally instituting the serf system.
There is no way of knowing if the Federal Reserve will proceed until hyperinflation sets in. I have very little faith in Bernanke's restraint, but the banksters who run our country will be reluctant to allow him to destroy the currency completely, so while inflation is a good bet in the near and medium term, unlike the decline of empires who follow late Roman monetary policy, hyperinflation is by no means inevitable.
The debt ceiling
Whatever one may think of our form of government, it is by all accounts amusing. The house Republicans, fresh off an electoral shellacking of the other faction of the ruling party, is holding the line on tax increases. This is unusual insofar as the right never holds a hardline on anything, but it is charming, albeit transient. On the other side, President Obama and the Democrats lament that the mean old Republicans refuse to consider tax cuts. The narrative, as always, is that the Democrats are concerned with the poor and the middle class while Republicans only care about millionaires and billionaires. This might pass muster if the President's party hadn't spent the last two years giving trillions of dollars to the likes of Goldman Sachs and J.P. Morgan.
There is some concern that the debt ceiling will not be raised. Coincidentally, this is in accordance with the wishes of the American people. Dutifully, then, the two wings of our ruling party shall come together yet again to raise a symbolic middle finger to the citizenry, whereupon both conservatives and liberals shall blame the mysterious other for the capitulation of their own champions. They will raise the debt ceiling because they always raise the debt ceiling. Kicking the can is the one task the legislative branch seems capable of performing.
Perhaps one should not ignore the chance that the President's egomania and the incompetence of the Congress prevent the ruling class from conspiring against the people. Yet this chance is remote, a point which should not be forgotten as the commentary--and the markets--shall become much more skittish as we approach the twelfth hour, whereupon--miracle of miracles!--a deal will be reached.
It is imperative, we are told, that the government raise the debt ceiling, as to do otherwise would force the U.S. to default--this being deemed irresponsible. The real lack of responsibility is better demonstrated by a government that wages endless wars and runs pyramid schemes, but at this late stage of our republic, rank hypocrisy is scarcely worthy of commentary.
The argument in favor of raising the debt ceiling is patently absurd for at least two reasons. First, since the government has enough money to continue to pay the interest on its debt, default would not occur. Certainly this would require the Congress to re-prioritize so as to avoid stiffing our creditors. Given the character of the Congress, this is a near impossibility; but it could be done, and would be done easily were we not governed by those who possess the restraint of children.
Second, a default becomes more likely, not less, as the U.S. takes on more debt. Given the extent of our unfunded liabilities, $114 trillion at last count, default is inevitable. In that sense, the debate over the debt ceiling is utterly irrelevant, but insofar as the American republic is salvageable, the argument is totally opposed to that made by our representatives in Washington. This only seems strange if, drunk on Keynesian macro-economic theory, we forget that the laws of economics also apply to nations. To put the matter differently, if running up ever higher levels of debt is propitious for a nation, it ought to work similarly for an individual. Here the absurdity becomes manifest: if I have six maxed out credit cards, my situation is not improved by applying for another card. When Congress raises the debt ceiling, they bestow upon themselves another credit card, and make it more likely, not less, that the U.S. will default.
Once they have been given an extended line of credit, Congress will begin to spend more money. To some extent, this will be obligatory, since federal pension funds have already been raided as an accounting trick to allow the government to stumble along until August. The problem, for the Congress--and for us--is that as the U.S. heads towards default, foreigners are becoming disinclined to purchase U.S. treasuries. This will require the Federal Reserve to step in and purchase government debt, though it remains to be seen whether they will do this as part of another round of quantitative easing or whether the Fed will simply debase the currency on the sly. Since Bernanke and his magical printing press are increasingly in the spotlight, it will be difficult for him to hide, but it is nonetheless bad news for anyone who holds U.S. dollars, which is to say, the lot of us.
Since there was no economic recovery, there was no double-dip recession, but I suspect that we will hear the latter term bandied about more frequently as it becomes clear, even to the clueless commentariat, that if the unemployment numbers are ever increasing, we are not in the midst of a recovery.
There is some concern that the debt ceiling will not be raised. Coincidentally, this is in accordance with the wishes of the American people. Dutifully, then, the two wings of our ruling party shall come together yet again to raise a symbolic middle finger to the citizenry, whereupon both conservatives and liberals shall blame the mysterious other for the capitulation of their own champions. They will raise the debt ceiling because they always raise the debt ceiling. Kicking the can is the one task the legislative branch seems capable of performing.
Perhaps one should not ignore the chance that the President's egomania and the incompetence of the Congress prevent the ruling class from conspiring against the people. Yet this chance is remote, a point which should not be forgotten as the commentary--and the markets--shall become much more skittish as we approach the twelfth hour, whereupon--miracle of miracles!--a deal will be reached.
It is imperative, we are told, that the government raise the debt ceiling, as to do otherwise would force the U.S. to default--this being deemed irresponsible. The real lack of responsibility is better demonstrated by a government that wages endless wars and runs pyramid schemes, but at this late stage of our republic, rank hypocrisy is scarcely worthy of commentary.
The argument in favor of raising the debt ceiling is patently absurd for at least two reasons. First, since the government has enough money to continue to pay the interest on its debt, default would not occur. Certainly this would require the Congress to re-prioritize so as to avoid stiffing our creditors. Given the character of the Congress, this is a near impossibility; but it could be done, and would be done easily were we not governed by those who possess the restraint of children.
Second, a default becomes more likely, not less, as the U.S. takes on more debt. Given the extent of our unfunded liabilities, $114 trillion at last count, default is inevitable. In that sense, the debate over the debt ceiling is utterly irrelevant, but insofar as the American republic is salvageable, the argument is totally opposed to that made by our representatives in Washington. This only seems strange if, drunk on Keynesian macro-economic theory, we forget that the laws of economics also apply to nations. To put the matter differently, if running up ever higher levels of debt is propitious for a nation, it ought to work similarly for an individual. Here the absurdity becomes manifest: if I have six maxed out credit cards, my situation is not improved by applying for another card. When Congress raises the debt ceiling, they bestow upon themselves another credit card, and make it more likely, not less, that the U.S. will default.
Once they have been given an extended line of credit, Congress will begin to spend more money. To some extent, this will be obligatory, since federal pension funds have already been raided as an accounting trick to allow the government to stumble along until August. The problem, for the Congress--and for us--is that as the U.S. heads towards default, foreigners are becoming disinclined to purchase U.S. treasuries. This will require the Federal Reserve to step in and purchase government debt, though it remains to be seen whether they will do this as part of another round of quantitative easing or whether the Fed will simply debase the currency on the sly. Since Bernanke and his magical printing press are increasingly in the spotlight, it will be difficult for him to hide, but it is nonetheless bad news for anyone who holds U.S. dollars, which is to say, the lot of us.
Since there was no economic recovery, there was no double-dip recession, but I suspect that we will hear the latter term bandied about more frequently as it becomes clear, even to the clueless commentariat, that if the unemployment numbers are ever increasing, we are not in the midst of a recovery.
Wednesday, June 29, 2011
Hypothetical prolific bloggers
I am a terribly lazy blogger. It is not that I have nothing that I would like to say so much as that it is both easier and more enjoyable to sit on my couch and read history books than to sit down at my computer and explain, yet again, why we are doomed, doomed, doomed.
Recently, I have been reading Paul Johnson's A History of the Jews. Johnson is exceedingly well read, and brings his wealth of knowledge to which ever topic he chooses to tackle. If I could overcome my sloth for a few years, I think I could eventually write a book, but to churn out books at the rate Johnson does--and such books--is hard for me to fathom. I have long been fascinated by prolific writers. Johnson is by no means the most prolific of writers, but his powers certainly tax my ability to comprehend.
Had Johnson been born a bit later, he may have ended up as a blogger--and no doubt a very good one. Two questions spring to mind. First, given the full extent of writers, who would have been the most prolific blogger? I don't have an answer, but St. Augustine springs readily to mind; he would have lorded over the heretics of the blogosphere. Second, would this have been a good thing for humanity? I spend a good deal of time on blogs, but I am also rather fond of books; and the latter tend to be more valuable.
And now, back to my books--and my laziness.
Recently, I have been reading Paul Johnson's A History of the Jews. Johnson is exceedingly well read, and brings his wealth of knowledge to which ever topic he chooses to tackle. If I could overcome my sloth for a few years, I think I could eventually write a book, but to churn out books at the rate Johnson does--and such books--is hard for me to fathom. I have long been fascinated by prolific writers. Johnson is by no means the most prolific of writers, but his powers certainly tax my ability to comprehend.
Had Johnson been born a bit later, he may have ended up as a blogger--and no doubt a very good one. Two questions spring to mind. First, given the full extent of writers, who would have been the most prolific blogger? I don't have an answer, but St. Augustine springs readily to mind; he would have lorded over the heretics of the blogosphere. Second, would this have been a good thing for humanity? I spend a good deal of time on blogs, but I am also rather fond of books; and the latter tend to be more valuable.
And now, back to my books--and my laziness.
Sunday, June 26, 2011
The pragmatic President and the cowardly Congress
The vitriol directed at President Obama is well known. I do not think it is fair to chalk this up to racism. Nonetheless, much of the criticism of Obama is misplaced. Far from being a far-left radical--a "socialist" in the bankrupt lexicon of contemporary American politics--Obama is essentially a pragmatist. His essential characteristic is not a deep-seated hatred of all that is quintessentially American: it is his almost total lack of principles. When given a choice between two contradictory courses of action, the man seeks out a middle course based on political instinct. This is of dubious utility to our doomed republic, but it is far more interesting.
Obama provided us with a good example during the speech on Afghanistan he made last week:
Already this decade of war has caused many to question the nature of America's engagement around the world. Some would have America retreat from our responsibility as an anchor of global security, and embrace an isolation that ignores the very real threats that we face. Others would have America over-extend ourselves, confronting every evil that can be found abroad.
We must chart a more centered course.
Faced with the neo-cons, who wish to make the endless wars of Orwell into reality, and the handful of doves in his own party, Obama decides we shall draw down some of our troops so as to maintain a via media. Whatever the political virtues of such a move, clearly this is not a coherent policy. It is only an attempt to refrain from making a tough decision, which, though it must be made eventually, can be postponed until after the next election. And so the wars continue, forever and always, until the day when economic reality compels us to admit that bankrupt nations have no business pretending to be Empires.
On a related note, the House of Representatives voted against the authorization of war with Libya--a war that goes on with or without the permission of Congress, the body which, according to the dead letter that is our Constitution, must go through the dreary business of actually declaring war. That same chamber proceeded to vote in favor of providing funding for that the same war.
The problem with our representatives is not that they possess convictions, which, if acted on, would bring about the ruination of the republic. The problem is that, if they possess any convictions, cowardice ensures that they may as well have none at all. Like the president, the chief objective of our representatives is to spurn commitment to anything which might lessen one's chances of reelection.
Mark Krikorian aptly quotes Edward Gibbon:
The senate of Rome, losing all connection with the Imperial court and the actual constitution, was left a venerable but useless monument of antiquity on the Capitoline hill.
Obama provided us with a good example during the speech on Afghanistan he made last week:
Already this decade of war has caused many to question the nature of America's engagement around the world. Some would have America retreat from our responsibility as an anchor of global security, and embrace an isolation that ignores the very real threats that we face. Others would have America over-extend ourselves, confronting every evil that can be found abroad.
We must chart a more centered course.
Faced with the neo-cons, who wish to make the endless wars of Orwell into reality, and the handful of doves in his own party, Obama decides we shall draw down some of our troops so as to maintain a via media. Whatever the political virtues of such a move, clearly this is not a coherent policy. It is only an attempt to refrain from making a tough decision, which, though it must be made eventually, can be postponed until after the next election. And so the wars continue, forever and always, until the day when economic reality compels us to admit that bankrupt nations have no business pretending to be Empires.
On a related note, the House of Representatives voted against the authorization of war with Libya--a war that goes on with or without the permission of Congress, the body which, according to the dead letter that is our Constitution, must go through the dreary business of actually declaring war. That same chamber proceeded to vote in favor of providing funding for that the same war.
The problem with our representatives is not that they possess convictions, which, if acted on, would bring about the ruination of the republic. The problem is that, if they possess any convictions, cowardice ensures that they may as well have none at all. Like the president, the chief objective of our representatives is to spurn commitment to anything which might lessen one's chances of reelection.
Mark Krikorian aptly quotes Edward Gibbon:
The senate of Rome, losing all connection with the Imperial court and the actual constitution, was left a venerable but useless monument of antiquity on the Capitoline hill.
Wednesday, June 22, 2011
Tocqueville - Democracy in America - Unlimited Power of the Majority in the United States, and Its Consequences (Part II)
Resuming where we left off, Tocqueville draws a distinction between tyranny and arbitrary power. America tends towards a system of arbitrary power, for the details of public officers "and the privileges that they are to enjoy are rarely defined beforehand." Moreover, "In general, the American functionaries are far more independent within the sphere that is prescribed to them than the French civil officers."
This is truer now than when he wrote this, as the Federal bureaucracy has expanded immeasurably after the Civil War. To give a concrete example, the "Dodd–Frank Wall Street Reform and Consumer Protection Act" contains numerous instances in which such-and-such a committee may decide how regulation is to proceed. The specifics are worked out after the majority has passed the bill.
Tocqueville was rightfully concerned about the possibility of liberty being infringed based on the omnipotence of majorities.
Any group of people is bound to possess conflicting opinions on matters related to the way in which they are to be governed. However, in the American Republic, once a majority has decided something, it becomes difficult, not merely to alter the legislation, but to have alternative opinions heard. To offer a position in dissension with that of the majority is to risk one's respectability.
Hence: "I know of no country in which there is so little independence of mind and real freedom of discussion as in America." Once the majority has decided, there is no power to which an American may appeal by way of disagreement. Thus "the majority raises formidable barriers around the liberty of opinion; within these barriers an author may write what he pleases, but woe to him if he goes beyond them." To an extent, the Internet may have seemed to altered this, but only superficially. Barriers of respectability remain firmly in place. This is problematic because it makes it unlikely that the government shall consider changing course--let alone actually altering it--when once it has gone astray.
Tocqueville offers us an amusing quip: "If America has not as yet had any great writers, the reason is given in these facts; there can be no literary genius without freedom of opinion, and freedom of opinion does not exist in America." No doubt this shocked the Americans who read his book, who concluded, en masses, that on this point at least, the Frenchman was dead wrong.
The tyranny of the majority can be blamed for the paucity of great men: "I attribute the small number of distinguished men in political life to the ever increasing despotism of the majority in the United States." This is a change from the early days of the Republic, in which many great men were to be found. After the founding, in the event that someone were to offer distinguishable views, he would be marginalized as a radical. Voting incessantly with one's party--or with the whole of Congress--provides no sure way to distinguish oneself. Indeed, it is worth noting that recent American presidents--not counting Obama, who served one term in the Senate--have emerged from State politics, this being, evidently, the only area in which potential presidents may--attempt to--differentiate themselves from the herd.
Finally, rather than expecting that the Republic would expire from weakness, Tocqueville expected the opposite to occur: "[I]t is almost always by the abuse of its force and the misemployment of its resources that it becomes a failure. Anarchy is almost always produced by its tyranny or its mistakes, but not by its want of strength." This is a very interesting observation. The "conservative" line has long been that the Constitution guarantees a limited government, by virtue of the restrictions it places on government. Yet Tocqueville correctly points out that, regardless of what the piece of paper says, the system has no sure guard against tyranny by way of the majority.
This is truer now than when he wrote this, as the Federal bureaucracy has expanded immeasurably after the Civil War. To give a concrete example, the "Dodd–Frank Wall Street Reform and Consumer Protection Act" contains numerous instances in which such-and-such a committee may decide how regulation is to proceed. The specifics are worked out after the majority has passed the bill.
Tocqueville was rightfully concerned about the possibility of liberty being infringed based on the omnipotence of majorities.
Any group of people is bound to possess conflicting opinions on matters related to the way in which they are to be governed. However, in the American Republic, once a majority has decided something, it becomes difficult, not merely to alter the legislation, but to have alternative opinions heard. To offer a position in dissension with that of the majority is to risk one's respectability.
Hence: "I know of no country in which there is so little independence of mind and real freedom of discussion as in America." Once the majority has decided, there is no power to which an American may appeal by way of disagreement. Thus "the majority raises formidable barriers around the liberty of opinion; within these barriers an author may write what he pleases, but woe to him if he goes beyond them." To an extent, the Internet may have seemed to altered this, but only superficially. Barriers of respectability remain firmly in place. This is problematic because it makes it unlikely that the government shall consider changing course--let alone actually altering it--when once it has gone astray.
Tocqueville offers us an amusing quip: "If America has not as yet had any great writers, the reason is given in these facts; there can be no literary genius without freedom of opinion, and freedom of opinion does not exist in America." No doubt this shocked the Americans who read his book, who concluded, en masses, that on this point at least, the Frenchman was dead wrong.
The tyranny of the majority can be blamed for the paucity of great men: "I attribute the small number of distinguished men in political life to the ever increasing despotism of the majority in the United States." This is a change from the early days of the Republic, in which many great men were to be found. After the founding, in the event that someone were to offer distinguishable views, he would be marginalized as a radical. Voting incessantly with one's party--or with the whole of Congress--provides no sure way to distinguish oneself. Indeed, it is worth noting that recent American presidents--not counting Obama, who served one term in the Senate--have emerged from State politics, this being, evidently, the only area in which potential presidents may--attempt to--differentiate themselves from the herd.
Finally, rather than expecting that the Republic would expire from weakness, Tocqueville expected the opposite to occur: "[I]t is almost always by the abuse of its force and the misemployment of its resources that it becomes a failure. Anarchy is almost always produced by its tyranny or its mistakes, but not by its want of strength." This is a very interesting observation. The "conservative" line has long been that the Constitution guarantees a limited government, by virtue of the restrictions it places on government. Yet Tocqueville correctly points out that, regardless of what the piece of paper says, the system has no sure guard against tyranny by way of the majority.
Friday, June 10, 2011
Tocqueville - Democracy in America - Unlimited Power of the Majority in the United States, and Its Consequences (Part I)
Tocqueville offers some observations regarding American political institutions:
"The Americans determined that the members of the legislature should be elected by the people directly, and for a very brief term, in order to subject them, not only to the general convictions, but even to the daily passions, of their constituents." Still, it should be noted that until fairly recently, Senators were elected by the legislature of their respective states as a nod to state sovereignty.
A bit later, he writes: "It is to a legislature thus constituted that almost all the authority of the government has been entrusted."
One cannot help comparing the America of which Tocqueville wrote with that we observe today. The near-constancy of the election cycle would not have surprised him. On the other hand, the legislature has managed to shirk many of the responsibilities which were given them by the founders. For instance, Congress no longer declares war, the president now being elevated to a Caesar of sorts, electable not quite by popular vote.
Tocqueville notes that candidates from the legislature were beholden to the voters to pass certain bills--or prevent them from being passed--ensuring that the masses did, in fact, rule. Probably it was so, but, for a variety of reasons, a more striking feature of contemporary American politics is the ease with which candidates break promises, seldom to their detriment.
The majority triumphs in a democracy, not merely because of its votes, but for an altogether different reason: "The moral authority of the majority is partly based upon the notion that there is more intelligence and wisdom in a number of men united than in a single individual, and that the number of the legislators is more important than their quality. The theory of equality is thus applied to the intellects of men; and human pride is thus assailed in its last retreat by a doctrine which the minority hesitate to admit, and to which they will but slowly assent."
In a democracy, then, those who hold the minority position are not simply out of step, they are wrong, and possibly anti-social. Hence the appeal to an opinion poll is a legitimate means of arguing in our society.
Despite being supreme, majorities will probably not be able to strip the rights of minorities: "If there existed in America a class of citizens whom the legislating majority sought to deprive of exclusive privileges which they had possessed for ages and to bring down from an elevated station to the level of the multitude, it is probable that the minority would be less ready to submit to its laws. But as the United States was colonized by men holding equal rank, there is as yet no natural or permanent disagreement between the interests of its different inhabitants."
Tocqueville examines the possibility of "the tyranny of the majority." It is possible for a majority to create a law which is unjust, say, that all those who write with their left hands must be killed. While the majority is sovereign, this sovereignty cannot be absolute, lest the majority seek to tyrannize the minority. Hence, "When I refuse to obey an unjust law, I do not contest the right of the majority to command, but I simply appeal from the sovereignty of the people to the sovereignty of mankind." Of course, mankind may still go wrong as well, but the general point is clear: their is a law which exists above the laws made by nations; if the latter contradict the former, they are not valid.
Although democracy was fully consistent with the zeitgeist, Tocqueville new it was wary of sentiment that democracy would cure all ills. "If it be admitted that a man possessing absolute power may misuse that power by wronging his adversaries, why should not a majority be liable to the same reproach?"
Nor can the evils of democracy be balanced by mixing the government with that of another type. Contrary to Aristotle, Tocqueville believed that mixed governments were chimerical: "in all communities some one principle of action may be discovered which preponderates over the others." In fact, "When a community actually has a mixed government--that is to say, when it is equally divided between adverse principles--it must either experience a revolution or fall into anarchy."
Tocqueville is more concerned with the limits on power, rather than the particular form of government: "Unlimited power is in itself a bad and dangerous thing. Human beings are not competent to exercise it with discretion. God alone can be omnipotent, because his wisdom and his justice are always equal to his power."
Far from being amazed at the weakness of the American government, Tocqueville was most alarmed at the lack of security against it being exercised to the fullest. There is nothing to which a man may appeal as against the will of the majority.
"I do not say that there is a frequent use of tyranny in America at the present day; but I maintain that there is no sure barrier against it, and that the causes which mitigate the government there are to be found in the circumstances and the manners of the country more than in its laws."
"The Americans determined that the members of the legislature should be elected by the people directly, and for a very brief term, in order to subject them, not only to the general convictions, but even to the daily passions, of their constituents." Still, it should be noted that until fairly recently, Senators were elected by the legislature of their respective states as a nod to state sovereignty.
A bit later, he writes: "It is to a legislature thus constituted that almost all the authority of the government has been entrusted."
One cannot help comparing the America of which Tocqueville wrote with that we observe today. The near-constancy of the election cycle would not have surprised him. On the other hand, the legislature has managed to shirk many of the responsibilities which were given them by the founders. For instance, Congress no longer declares war, the president now being elevated to a Caesar of sorts, electable not quite by popular vote.
Tocqueville notes that candidates from the legislature were beholden to the voters to pass certain bills--or prevent them from being passed--ensuring that the masses did, in fact, rule. Probably it was so, but, for a variety of reasons, a more striking feature of contemporary American politics is the ease with which candidates break promises, seldom to their detriment.
The majority triumphs in a democracy, not merely because of its votes, but for an altogether different reason: "The moral authority of the majority is partly based upon the notion that there is more intelligence and wisdom in a number of men united than in a single individual, and that the number of the legislators is more important than their quality. The theory of equality is thus applied to the intellects of men; and human pride is thus assailed in its last retreat by a doctrine which the minority hesitate to admit, and to which they will but slowly assent."
In a democracy, then, those who hold the minority position are not simply out of step, they are wrong, and possibly anti-social. Hence the appeal to an opinion poll is a legitimate means of arguing in our society.
Despite being supreme, majorities will probably not be able to strip the rights of minorities: "If there existed in America a class of citizens whom the legislating majority sought to deprive of exclusive privileges which they had possessed for ages and to bring down from an elevated station to the level of the multitude, it is probable that the minority would be less ready to submit to its laws. But as the United States was colonized by men holding equal rank, there is as yet no natural or permanent disagreement between the interests of its different inhabitants."
Tocqueville examines the possibility of "the tyranny of the majority." It is possible for a majority to create a law which is unjust, say, that all those who write with their left hands must be killed. While the majority is sovereign, this sovereignty cannot be absolute, lest the majority seek to tyrannize the minority. Hence, "When I refuse to obey an unjust law, I do not contest the right of the majority to command, but I simply appeal from the sovereignty of the people to the sovereignty of mankind." Of course, mankind may still go wrong as well, but the general point is clear: their is a law which exists above the laws made by nations; if the latter contradict the former, they are not valid.
Although democracy was fully consistent with the zeitgeist, Tocqueville new it was wary of sentiment that democracy would cure all ills. "If it be admitted that a man possessing absolute power may misuse that power by wronging his adversaries, why should not a majority be liable to the same reproach?"
Nor can the evils of democracy be balanced by mixing the government with that of another type. Contrary to Aristotle, Tocqueville believed that mixed governments were chimerical: "in all communities some one principle of action may be discovered which preponderates over the others." In fact, "When a community actually has a mixed government--that is to say, when it is equally divided between adverse principles--it must either experience a revolution or fall into anarchy."
Tocqueville is more concerned with the limits on power, rather than the particular form of government: "Unlimited power is in itself a bad and dangerous thing. Human beings are not competent to exercise it with discretion. God alone can be omnipotent, because his wisdom and his justice are always equal to his power."
Far from being amazed at the weakness of the American government, Tocqueville was most alarmed at the lack of security against it being exercised to the fullest. There is nothing to which a man may appeal as against the will of the majority.
"I do not say that there is a frequent use of tyranny in America at the present day; but I maintain that there is no sure barrier against it, and that the causes which mitigate the government there are to be found in the circumstances and the manners of the country more than in its laws."
Friday, June 03, 2011
Democratic Social Condition of the Anglo-Americans
The next section from our excerpts expands upon the social conditions in the United States. The northern colonists arrived in equal standing and more or less so remained. Although the southern colonies had an aristocracy of sorts, plantation owners were never formally accorded any special privileges. More to the point, it became impossible for them to demand such advantages in the political climate following the Revolution, which was carried out in the name of democratic independence (407). The Constitution, in fact, explicitly forbids the establishment of a nobility.
Tocqueville singles out inheritance law as the crucial institutional barrier to the emergence of such a class. European aristocracies perpetuate themselves by the law of primogeniture. A lord's income is generated by his estate, and keeping that estate intact from one generation to the next preserves the aristocracy. Families are equated with their estates in name and in the popular imagination. In consequence of this, Tocqueville writes, "family feeling is to a certain degree incorporated with the estate[,...] whose names, together with its origin, its glory, its power, and its virtues, is thus perpetuated in an imperishable memorial of the past and a sure pledge of the future" (408).
A law that divides the estate among multiple inheritors also dissolves the mythologized idea of family upon which the aristocracy depends. Self-interest usurps the collectivist ideal, and individuals rise or fall according to the value they generate in economic markets and in civil society.
This democratic individualism has implications for the educational system in the United States. General education, at the time Tocqueville was writing, ended at 15 years of age, at which point one entered a more specific vocational training. He seems to think well of this development, in which a democratically accessible "human knowledge" supplants the elite "intellectual pleasures" of the aristocracy. Knowledge is valued not so much for its own sake as for its utility. The market becomes the final arbiter of what's worth knowing.
Tocqueville singles out inheritance law as the crucial institutional barrier to the emergence of such a class. European aristocracies perpetuate themselves by the law of primogeniture. A lord's income is generated by his estate, and keeping that estate intact from one generation to the next preserves the aristocracy. Families are equated with their estates in name and in the popular imagination. In consequence of this, Tocqueville writes, "family feeling is to a certain degree incorporated with the estate[,...] whose names, together with its origin, its glory, its power, and its virtues, is thus perpetuated in an imperishable memorial of the past and a sure pledge of the future" (408).
A law that divides the estate among multiple inheritors also dissolves the mythologized idea of family upon which the aristocracy depends. Self-interest usurps the collectivist ideal, and individuals rise or fall according to the value they generate in economic markets and in civil society.
This democratic individualism has implications for the educational system in the United States. General education, at the time Tocqueville was writing, ended at 15 years of age, at which point one entered a more specific vocational training. He seems to think well of this development, in which a democratically accessible "human knowledge" supplants the elite "intellectual pleasures" of the aristocracy. Knowledge is valued not so much for its own sake as for its utility. The market becomes the final arbiter of what's worth knowing.
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